Global Corporation Had 50,000 Shares of $20 Par Value Common

question 14

Multiple Choice

Global Corporation had 50,000 shares of $20 par value common stock outstanding on July 1. Later that day the board of directors declared a 10% stock dividend when the market value of each share was $27. The entry to record this dividend is:

• A)Debit Retained Earnings $135,000; credit Common Stock Dividend Distributable $135,000.
• B)Debit Retained Earnings $135,000; credit Cash $135,000.
• C)Debit Retained Earnings $135,000; credit Common Stock Dividend Distributable $100,000; credit Paid-In Capital in Excess of Par Value, Common Stock $35,000.
• D)Debit Retained Earnings $100,000; credit Common Stock Dividend Distributable $100,000.
• E)No entry is made until the stock is issued.Common Stock Dividend Distributable: 50,000 shares * 10% × $20 = $100,000

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Definitions:

Market Power

The ability of a firm or group of firms to manipulate the price of goods or services in a market due to lack of competition.

Monopolistically Competitive

Describes a market structure where many firms sell products that are similar but not identical, allowing for significant competition but with a degree of product differentiation.

Product Differentiation

The process by which companies distinguish their products from those of competitors in the eyes of consumers by varying design, quality, or other attributes.

Monopolistically Competitive

A market structure in which many companies sell products that are similar but not identical, allowing for competition based on price, quality, and branding.